FIDELITY INVESTMENTS SAYS TEMPORARY ISSUE IMPACTING FIDELITY PLATFORMS RESOLVED; SYSTEMS NOW UP AND RUNNING; ASSETS AND INFORMATION ARE SECURE
Tuesday, August 15, 2023
'China crisis'
The word 'crisis' should always be used responsibly and judiciously when covering financial markets, business and economics, but are we at that point now with China?
Developments in the last 24 hours from the world's second largest economy - another string of top-tier data 'misses', a shock interest rate cut and an abrupt announcement that (record high) youth unemployment data will no longer be published - suggest we might be.
The deepening concern around China's economy, policy options and financial markets will weigh heavily on Asian investor sentiment on Wednesday, with an interest rate decision from New Zealand and the latest manufacturing and service sector 'tankan' surveys from Japan also on tap.
It's not all doom and gloom in Asia - Japan's economy grew twice as fast in the second quarter as economists had expected - but China's travails are front and center right now.
Perhaps even more worrying for investors than the misses on investment, industrial production and retail sales, or the surprise rate cut, was Beijing's decision to suspend the publication of youth unemployment figures for an unspecified length of time.
The official rate in June was a record 21.3%. That's bad enough, but in an online post last month - since removed - Peking University professor Zhang Dandan estimated it could be closer to 50%.
The latest snapshot of Chinese house prices will be released on Wednesday, and again, another weak report could be in store, with the country's property sector in a genuine state of crisis.
JP Morgan on Tuesday said if developer Country Garden suffers a full-scale default, it will more than double China's year-to-date property default tally to $17 billion, adding to the $100 billion racked up over the past two and a half years.
The People's Bank of China may have finally pulled the interest rate lever, but it had the expected impact of slamming the exchange rate. The offshore yuan tumbled through 7.30 per dollar to its weakest level this year and is now flirting with November's historic low of around 7.35 per dollar.
Compare and contrast China with Japan, as per Tuesday's bumper Q2 GDP data, and the U.S., where figures on Tuesday showed a surge in retail sales. The Atlanta Fed's GDPNow model is projecting annualized Q3 growth of 5.0%.
Global stocks, Wall Street and emerging markets all buckled on Tuesday under the weight of rising bond yields, 'higher for longer' Fed rate expectations and a buoyant dollar.
The MSCI Asia ex-Japan index fell for a fourth day and has now only risen twice in the last 11 sessions. Among the biggest losers in Asia on Tuesday was Hong Kong's mainland property index, which fell 1% to take its year-to-date decline to 16%.
'Stay Home': Feds Tell San Francisco Workers To Telecommute Due To Crime Wave
Crime is so bad near San Francisco's US Department of Health and Human Services federal building that officials have advised hundreds of employees to work remotely for the foreseeable future.
"In light of the conditions at the (Federal Building) we recommend employees … maximize the use of telework for the foreseeable future," according to a copy of the memo by HHS Assistant Secretary for Administration Cheryl R. Campbell, and obtained by the San Francisco Chronicle, which notes that the area surrounding the building is home to 'one of the city's most brazen open-air drug markets.'
"This recommendation should be extended to all Region IX employees, including those not currently utilizing telework flexibilities," the memo continues, referring to the federal government's zone governing California and other Western states.
The memo came on the same day that, according to Axios, President Biden’s White House chief of staff called for more federal employees to return to their offices after years of remote work due to the COVID-19 pandemic.
It was not immediately clear whether other tenants in the building had issued similar directives. Officials with Pelosi’s office and the Department of Labor said they have been working closely with local and federal law enforcement to ensure safety for their staffers, but they have not advised employees to work from home.
The building has long been a locus of some of the city’s most intractable problems. -SF Chronicle
According to the report, dozens of drug dealers routinely post up on, next to, or across the street from the building, where they operate in shifts as users smoke, snort or shoot up drugs - particularly on the property's concrete benches, where drug users regularly pass out.
"The safety of workers in our federal buildings has always been a priority for Speaker Emerita Pelosi, whether in the building or on their commutes," said a Pelosi spokesperson in a statement. "Federal, state and local law enforcement — in coordination with public health officials and stakeholders — are working hard to address the acute crises of fentanyl trafficking and related violence in certain areas of the city."
Meanwhile, the owners of one of San Francisco's most famous department stores, Gumps, have written a scathing letter to city leaders and California Governor Gavin Newsom.
"Gump's has been a San Francisco icon for more than 165 years," reads the letter from Chairman John Chachas, who acquired Gump's in 2018 out of Chapter 11 bankruptcy. "Today, as we prepare for our 166th holiday season at 250 Post Street, we fear this may be our last because of the profound erosion of this city's conditions."
Biden Announces $39 Billion Student Loans Will Be "Automatically Discharged" Soon
by Naveen Athrappully via The Epoch Times (emphasis ours),
The Department of Education announced Monday that it will begin notifying more than 804,000 borrowers that their $39 billion in federal student loans will be “automatically discharged in the coming weeks.”
“The forthcoming discharges are a result of fixes implemented by the Biden-Harris Administration to ensure all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans,” said the administration in an Aug. 14 press release—a month after the forgiveness plan was announced.
The department said that the forgiveness program was part of fixes to address “historical failures” in which “qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for.”
If borrowers have accumulated the equivalent of either 20 or 25 years of qualifying months, they were “eligible for forgiveness,” said the department.
In total, the current Biden administration has approved more than $116.6 billion in student loan forgiveness for more than 3.4 million borrowers, according to the release.
Furthermore, the department touted the Saving on a Valuable Education (SAVE) plan, which will cut payments on undergraduate loans in half compared to other IDR plans, ensure that borrowers never see their balance grow as long as they keep up with their required payments, and protect more of a borrower’s income for basic needs.
“A single borrower who makes less than $15 an hour will not have to make any payments.”
Borrower benefits from the SAVE plan is estimated to begin rolling out this summer, according to the administration.
SCOTUS Ruling and Biden Counter
On June 30, the Supreme Court voted in a 6–3 decision to strike down the Biden administration’s loan forgiveness plan.
In what is widely considered a political move, President Joe Biden promised to cancel as much as $20,000 for around 40 million borrowers, resulting in a massive $800 billion commitment, with experts claiming it could easily cross the trillion-dollar mark.
“They said no, no—literally snatching from the hands of millions of Americans thousands of dollars in student debt relief that was about to change their lives,” President Biden said after the SCOTUS decision. “Today’s decision has closed one path and now we’re going to pursue another.”
President Biden promised a “new way” to circumvent the decision.
The Department of Education then started to pave the way to finalizing “the most affordable repayment plan ever created” using the authority found under the Higher Education Act. There were several programs put under this plan to support borrowers.
“President Biden, Vice President Harris, and I will never stop fighting for borrowers, which is why we are using every tool available to provide them with needed relief," said Education Secretary Miguel Cardona at the time. "Earlier today, the Department of Education initiated a regulatory process to provide debt relief, so we can help the working- and middle-class borrowers who need it most.”
Despite the administration’s insistence that low- and middle-income borrowers would benefit, experts have pointed out the programs a putting strain on the economy, with some estimates placing the amount at up to $1 trillion in additional federal expenditures over the next decade.
“We have a student loan system that assumes that people are going to pay their debt back, and instead, it’s just this massive government spending policy that has negative effects for everybody,” said Caleb Kruckenberg, an attorney at Pacific Legal Foundation to The Epoch Times.
Eligibility Complications
The loan forgiveness is only applicable to loans that were made under the IDR plan provided the borrowers have made 240 to 300 monthly payments, which is equivalent to 20 to 25 years' worth.
An IDR plan sets the monthly repayment at an amount deemed to be affordable for the borrowers based on their income and family size.
In addition to being an IDR plan, the loan must either be a federal Direct Loan or a Federal Family Education Loan held by the Department of Education, including Parent PLUS loans.
To be eligible for loan forgiveness, the borrower must hit the required loan forgiveness threshold as a result of receiving credit for IDR forgiveness on any of the following five periods, per the press release.
- Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
- Any period in which a borrower spent 12 or more consecutive months in forbearance
- Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
- Any month spent in deferment (except for in-school deferment) prior to 2013; and
- Any month spent in economic hardship or military deferments on or after January 1, 2013.
“In addition, months described above that occurred prior to a loan consolidation will also be counted toward forgiveness.”
Blowback to ‘Forgiveness’
The Biden administration’s income-based student loan repayment plan could cost $475 billion over a period of 10 years and end up encouraging “more loan borrowing” among college students.
According to an estimate by the Department of Education, the SAVE plan will cost $138 billion over a decade.
However, the University of Pennsylvania’s Penn Wharton’s Budget Model predicts the cost to be more than three times that. “We estimate SAVE will incur a net cost of $475 billion over the 10-year budget window,” a July 17 post about the Budget Model said.
Roughly $200 billion of this cost will come from payment reduction for the student loans that are already outstanding this year. Once SAVE comes into effect in July next year, the model estimates that over half of the current loan volume will switch to the plan.
The remaining $275 billion of the cost will come from reduced payments for around $1 trillion in new loans that the model calculates will be extended over the next decade.
The model warns that “due to the increased generosity of the newly proposed IDR (income-driven repayment) plan, future student borrowers have the incentive to increase their federal student loan borrowing.” As a result, the current college financing pattern will shift toward “more loan borrowing instead of paying out-of-pocket.”
The $475 billion is the “medium” estimate of the model, which predicts a conservative estimate of $390.9 billion and a “maximum” estimate of up to $558.8 billion.
In a June 30 statement, Alfredo Ortiz, president and CEO of Job Creators Network, slammed President Biden for criticizing the Supreme Court order striking down his student loan forgiveness plan and his vowing to find another way to push ahead with it.
“President Biden shamelessly failed to recognize a co-equal branch of government in his remarks,” Mr. Ortiz said. “Rather than respecting the court’s decision, Biden promised more executive overreach to forgive student loan debt. His proposals include expanded income-driven repayment plans and a 12-month grace period when payments are set to restart this fall.”
Why BioXcel Therapeutics Stock Flopped Again
Even though it's only Tuesday, BioXcel Therapeutics (BTAI -4.39%) is having a week to forget. After the biotech's share price tanked on Monday on the back of less-than-inspiring quarterly results and the announcement of significant job cuts, it was hammered again the following day. It lost over 4% of its value, which unfavorably compared to the 1.2% decline of the S&P 500 index.
As often happens in the wake of quarterly earnings reports that are either far better or substantially worse than expected, analysts adjusted their takes on BioXcel Tuesday.
That wasn't a good development for the company. One prognosticator, Graig Suvannavejh of Mizuho Securities, went as far as to downgrade his recommendation on the stock. Suvannavejh now feels BioXcel now only rates a neutral, instead of his previous buy. More discouragingly, the pundit made a severe cut to his price target -- it's now $4 per share, down sharply from his preceding $40.
Suvannavejh's new take is based heavily on that earnings report. He's adjusted his model on the biotech company's financials on the basis of its restructuring, in addition to its "strategic reorganization." Both were announced in the report.
While other analysts didn't change their recommendations, they did get more bearish on BioXcel's potential. Prognosticators from Goldman Sachs, Truist Securities, and Canaccord Genuity all trimmed their price targets.
Goldman Sachs' Corinne Jenkins lowered hers to $4 per share from $12, while Truist's Robyn Karnauskas now feels the stock is worth $31 (from $71). Cannacord Genuity's Sumant Kulkarni's new level is $20; previously it stood at $75. All three analysts are maintaining their recommendations, though, which are neutral, buy, and buy, respectively.
https://www.fool.com/investing/2023/08/15/why-bioxcel-therapeutics-stock-flopped-again-today/
Epstein Tapped JPMorgan to Help Goldman Top Lawyer Open Account
- Financier referred Kathy Ruemmler to senior banker Mary Erdoes
- Email thread is part of USVI suit accusing bank of misconduct
Jeffrey Epstein’s assistant reached out to a senior executive at JPMorgan Chase & Co. more than four years ago to help former Obama White House lawyer Kathy Ruemmler open an account before she joined Goldman Sachs Group Inc., where she is now general counsel, according to a court filing.
An email thread initiated by the financier’s office was revealed in a lawsuit by the US Virgin Islands that accuses JPMorgan of knowingly benefiting from Epstein’s sex crimes. The dialog was about six years after the bank fired Epstein as a client and six months before Epstein died in prison by suicide while awaiting trial.
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